Through increased fees, charges, penalties and enforcement, city departments
have been raising a lot more money from San Franciscans in the last few years.
Yet despite increasing revenues, city government has struggled to fill budget
deficits, including a $338 million gap in its record $6.5 billion city budget
this year.

Revenues generated by city departments - from permits and license fees, water
sales, tickets and fines - are increasing almost across the board, including
from the SF Department of Building Inspection, Department of Public Health (DPH),
San Francisco Public Utilities Commission, Muni, Department of Public Works
and Recreation and Park Department.

Along with this year's mammoth budget came a deficit that cannot be filled
through raising property tax rates, because of the limitations of Proposition
13, and the failure to get increased sales and business taxes that voters rejected
in 2004.

According to documents from the city controller and budget analyst offices,
over the past three years, from fiscal years 2006-07 to 2008-09, revenues generated
by the Department of Public Health jumped 30 percent, from $894 million to an
estimated $1.2 billion.

A revenue source for DPH that is prominently on the rise is designated "eating
places," restaurants and other food-serving or hospitality-industry establishments,
which rose 22 percent, from $4 million to $4.9 million, due in part to increases
in permit fees and other charges. Revenues from traffic fines that go to the
department have jumped 79 percent in that time, from about $661,000 to almost
$1.9 million. And revenues labeled "penalties" are up 60 percent, from $65,000
to more than $103,000.

"All of our fees are based on the cost of (DPH) programs," said Eileen Shields,
spokesperson for DPH. "Over the past few years the cost of running programs
have been more than (DPH) could recover, therefore the fees needed to be increased
to recuperate all costs. The majority of the fees are now projected to be near
cost recovery."

Restaurants and hospitality establishments are also getting pumped for money
by the Department of Public Works, which increased its total revenues by six
percent in the last year, from $110 million to $116.3 million. The department
raises funds through various permits, including those for outdoor sidewalk tables,
sidewalk and flower market displays, and penalties and fines for things like
improperly dealing with garbage disposal.

Zander Andreas, a third generation San Franciscan and owner of the Boom Boom
Room nightclub on Fillmore Street, thinks the City is being excessive in its
zeal to raise money.

"I've lived here my whole life. My parents lived here their whole life and so
have my grandparents. It's quite a different place now, with a lot of good improvements,
yes, but as far as operating a business, sometimes I have to gasp for breath
to see how I'm going to make ends meet when another fee, or a raised fee or
a service cost, is enacted and put on my shoulders."

The Boom Boom Room is one of those places in San Francisco that looks a little
rough on the outside, sitting on the same block with several closed and boarded-up
former retail shops. Stepping inside, however, is like entering a swanky jazz-era
nightclub. It has a black-and-white checkered dance floor, plush, dark-red curtains
and pictures of all-time great jazz and blues musicians hanging across the walls.

Andreas was recently hit with a fee to pay for the health insurance of uninsured
residents in the City. "The health care fee, basically to me it's a tax because
if the employee doesn't even use it, it still goes to the city's coffers," he
said. "I don't know very many employees of my friends' businesses either who
are going to use this fee toward health care. I don't know that they're going
to go to General Hospital to use the city's health plan. If it's not used, where
does that money go? It goes into the city coffers."

Andreas said he was recently visited by fire department personnel and became
acquainted with a fee he wasn't even aware existed - for a permit to have candles.

"I've been operating for 11 years with candles," he said. "If I don't use
candles, the way that I've designed this place and directed my vibe of the place,
the decor, vibe and feel would be completely destroyed. It would be a different
place altogether. So of course I'm going to use candles. But now I have to go
down to the fire department and pay a fee, my annual fee for candles." Kevin
Westlye, executive director of the Golden Gate Restaurant Association, said
restaurants are already getting squeezed by "aggressive price increases," including
a recent rise in the minimum wage, mandatory health care benefits and rising
commodity and fuel prices. Nevertheless, he understands the City has limited
options in paying its bills.\

"Under Prop. 13, the county cannot raise property taxes more than 2 percent
a year, which does not keep up with the rising cost of government services,"
Westlye explained. "The obvious solution is either new fees or fee increases.
To deal with the budget deficit there has been discussion of many fee increases."

When SF Mayor Gavin Newsom's proposal to tax businesses $80 million to pay
for health insurance for uninsured people in the City passed, the association
requested its members add the charge to consumer's checks, resulting in a three
to four percent increase in diner's tabs. At Pasta Pompadoro, a four percent
charge is added to customer's bills - essentially increasing the sales tax to
nearly 13 percent to pay for the new charge.

The DPW isn't just soaking restaurants. The department's charge for news racks
doubled this year, from $30 to $60 per location. As well, department employees
photograph garbage cans left in "plain site" and fine homeowners $100 for not
putting away all three of the department's cans, those for garbage, compost
and recycling. (The mayor has also proposed fining residents $100 for not properly
sorting their throw-aways into the proper can.)

Rene Cazenave is a native San Franciscan who's worked with more than 200 community-based
organizations over the last 41 years, like public policy advocacy groups working
on community development. He suggested that departments increasing their revenues
by tapping the small business owner is grossly unfair. He would like to see
larger businesses downtown paying more.

"It's trying to balance the budget on the back of community residents in the
absence of considering a more fair system that would also charge downtown developers
and big corporations for their fair share of these services," he said. "They
build monster high-rise buildings that demand a whole slew of city services."
He listed things like Muni, police, garbage and sewage services, all of which
will need to be expanded to accommodate more people.

"Sure, department fees make some sort of sense in that the people who pay
more are those who use more; the problem is the increases are far too high for
regular people. The larger folks aren't paying at all or if they are paying
some more it's no sweat off their backs."

But Gabriel Metcalf, executive director of the San Francisco Planning and
Urban Research association (SPUR), a public policy think tank, disagrees.

"I think the city is charging big developers every last dollar possible. Every
time there is a new neighborhood plan or rezoning they attach huge fees to new
development," he said.

San Franciscans are already paying more for water. The San Francisco Public
Utilities Commission generates almost all it's own revenues, which rose more
than seven percent since 2006.

The PUC recently tried to move to a three-tiered plan to charge water customers
in the City. Dubbed the "family tax" because it penalized large families living
in a single domicile, the plan was scaled back to a two-tier rate system. Critics
claim it still penalizes large families who have to use more water for cooking,
showering, etc.

The plan is intended to encourage water conservation, the PUC counters, by
charging more money for water over a set limit.

Since 2006, water rates have increased 32 percent and retail wastewater rates
rose by 19 percent, according to Tony Winnicker, a spokesman for the PUC.

One department that's been in the press lately for its revenue enhancements
is the Municipal Transportation Agency, or Muni, which raised it's parking-ticket-generated
revenue by raising all tickets $10 each across the board. Over the next two
years, revenues from tickets are expected to increase by 20 percent, adding
about $17 million to the transportation agency's pot. Revenues from boot fees
for ticket scofflaws are expected to jump by 176 percent by 2010. The Recreation
and Park Department is also raising many of its fees, including swimming pool
fees, athletic field and other facilities rental fees, and entrance fees to
places like Coit Tower.

While the government cannot arbitrarily raise property taxes to fill budget
gaps, Proposition 13 does provide an opportunity for property taxes to rise
when property is sold by assessing a new sales amount. According to a study
by the California Taxpayers Association, during the last fiscal year county-assessed
property values in San Francisco rose nine percent.

In the last three years, revenues from property taxes have risen 21 percent.
During this time, other local tax revenues rose 14 percent and business tax
revenues rose 19 percent. Also, revenues from charges for services in that time
have risen 8 percent, from fines and penalties 6 percent, and from license and
permit fees revenues have increased 20 percent.

Despite the across-the-board revenue increases, which has driven the city's
budget to a record $6.5 billion, this year's budget started with a $338 million
deficit. The Board of Supervisors balanced the budget with cuts in city services.
Salaries in the City Most of the increased revenues in this year's budget were
taken by increased labor costs, with the city now paying for more than 27,000
employees. The city recently approved new contracts with the unions of the police,
firefighters and nurses, increasing costs to the City by about $118 million
in the coming year.

City budget documents also show that between fiscal year 2006-2007 and this
year, expenditures for salaries to the county sheriff's office increased by
27 percent, up to $82.7 million, along with benefits for those employees, which
rose 22 percent.

During this time salaries for the Police Department rose 26 percent, from
$250.8 million to $316 million in this year's budget. Benefits rose by 18 percent.
Fire Department salaries went up 15 percent, from $187 million to 215 million,
while benefits for increased by 14 percent.

Despite the increase in department costs, the actual number of funded positions
dropped by eight percent. Muni salaries are projected to climb to $353.6 million
by fiscal year 2009-2010, an increase of $42 million over about four years.
As well, benefits for Muni workers will climb nine percent. In the last two
years, Department of Public Health salaries increased by 13 percent, from 444.4
million to $500.6 million.

NTanya Lee is the executive director of the Coleman Advocates for Children
and Youth, a family advocacy organization. She said hikes in the cost of city
services and fees are the result of a process that started back in fiscal year
2003-2004, when the city was facing a $347 million shortfall.

"That's when all this started," said Lee. "So now it's fees that they've raised
on top of those fees. The city is in a bind." In the past few years the city
has also seen many middle-class and working-class people move out while upper-income
people have moved in.

The two biggest reasons for this, all experts agree, are the rising cost of
housing and the perception that San Francisco public schools aren't worth the
money it costs to live here. But quality of life issues matter too, with so
many costs being put on the backs of lower- and middle-income people in the
City.

According to Lee, working class families spend so much of their income on
housing and an increased cost of living that they can't always afford their
own health care, or daycare for their children, or vacations out of town.

"We live in a city where we have this weird tension, a built in tension of
being in a hot real estate market city, where the real estate market is really
good," Lee explained. "That means city government gets the benefit in terms
of revenue. But being a hot-real-estate-market city causes social problems.
(Middle and lower income) people can't afford to live here and families are
spending much more of their income on housing and a rising cost of living. The
economics are squeezing the middle and lower classes. The city government has
a responsibility to fill in the gaps with child care and housing subsidies."

According to census figures, the City has lost many of its middle class residents
and minorities in recent years, including a dramatic drop in the number of African
Americans that are able to call San Francisco home. Critics say the city's tax,
fine and fee structure is regressive in nature, hurting poorer residents the
most because the charges take a larger, more disproportionate chunk of their
money.

There has been more than a 33 percent reduction in the number of children living
in the City since 1960. Andreas, the owner of the Boom Boom Room, suspects people
like him will have to foot the ever-increasing bills to provide city services.

"I have to raise prices to meet the cost of increased fees and taxes. That
alone is a wash for me," he said. "If I have to raise the cost of a beer $2
to meet the cost of increased fees and taxes, I don't think you're going to
have many people who are going to buy four or five beers over the course of
a night. You're going to kill the entrepreneur by taxing the crap out of them."